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Government to open bidding for £3bn guarantees scheme
The government will launch an open bidding process to find the company to run the £3bn Affordable Homes Guarantees Scheme announced in the Spring Statement, Inside Housing has learned.
A spokesperson for the Ministry of Housing, Communities and Local Government (MHCLG) said a procurement process to choose a delivery partner “will take place soon”.
The scheme, which chancellor Philip Hammond said will deliver 30,000 affordable homes, involves the government agreeing to stand behind housing association bonds, promising to repay them in the unlikely event of default.
It follows a previous scheme scrapped in 2015 by then-chancellor George Osborne, under which the government guaranteed a total of £3.2bn of housing association debt.
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Although the decision was made to discontinue it in 2015, money was lent under that scheme until last year.
The spokesperson told Inside Housing that the scheme will be operated by an external delivery partner and the government’s housing delivery agency, Homes England, will manage that partner’s licence and report to MHCLG on the scheme’s performance.
They also said that the department is still developing exactly how the scheme will work.
The previous scheme, for example, required housing associations to show that all the money borrowed would go directly towards the building of new homes.
In its submission to the Autumn Budget, the National Housing Federation said that any new guarantees scheme should permit associations to use the money for refinancing as well.
Mr Hammond’s comments during the Spring Statement, however, suggest that the government is likely to bring back the new build requirement.
A source who has spoken to MHCLG officials told Inside Housing that a market engagement process is currently under way and that they expect this to continue until July, when procurement will begin.
The previous scheme also had a tendering process, which was won by bond aggregator, The Housing Finance Corporation (THFC).
Piers Williamson, chief executive of THFC, said he plans to bid to run the scheme again, but added that he is not “complacent” and expects “there will be a lot more competition” this time.
